Introduction
The method of analysis that a company can use to analysis the competition that will be discussed in this paper was developed by Michael Porter. The name of this method is Porter’s five forces of analysis. The method is used to help a company evaluate the industry to see where and how they can obtain a competitive edge over the competition. The industry that will be used in this paper is the cell phone industry.
Porter’s Competitive Analysis
Porter’s Five Forces Model is made up of five forces and they are as follows: buyer power, supplier power, threat of substitute products or services, threat of new entrants, and rivalry among existing competitors. These five powers are looked at by evaluating the industry from all standpoints and seeing what the risk are involved with entering the industry. Buyer power is high and supplier power is low when they have many options to choose from; however, the powers are the opposite when the choices are of lesser means because the buyer power will be low and the supplier power high. Threats of substitute products or services are high when there are many choices and low when there is fewer choices. Threat of new entrants is high there are no barriers to stop the competitors from entering the market and low when there are barriers. Rivalry among existing competitors is high when there is a lot of competition and low when there is not (Baltzan & Phillips, 2008).
The Porter’s five forces analysis is a way of looking at an industry from all aspects of a business to aid in making a good business decision. It also ensures that research has been conducted of the industry prior to making the decisi ...